USD Price Outlook: US Dollar Back to Resistance, GBP/USD Dips on BoE
US Dollar, GBP/USD Talking Points:
- The US Dollar is back to the 98.00 level on DXY, marking the fourth such test since the level came back into play around last week’s FOMC rate decision.
- The big item this morning has been the Bank of England Super Thursday rate decision, and a surprising two votes for rate cuts helped to pull GBP/USD down to fresh weekly lows.
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US Dollar Back to Resistance
The US Dollar is back at the 98.00 level on DXY and this is the fourth such instance over the past eight days. It appears as though it’s a simple matter of time before buyers able to push up to fresh three-week-highs and given the higher-low support that’s shown over the past couple of days this keeps that theme alive with an ascending triangle formation. The price of 98.00 came in as the swing-high around FOMC and similarly came in to set the daily high on Tuesday morning as well as last night.
US Dollar Two-Hour Price Chart
US Dollar: Deeper Retracement in the Q4 Reversal?
The big item from last month was the bearish reversal in the US Dollar. The currency came into Q4 with a full head of steam, setting a fresh two-year-high on the first trading day of the quarter. But, the longer-term formation was showing as a rising wedge, which will often be approached with the aim of bearish reversals and that was the side looked at in the Q4 Technical Forecast on the US Dollar. That scenario played out through October and the US Dollar came into the month of November around two-month-lows. But so far this week USD bears have remained at bay.
This morning’s short-term bullish formation comes at odds with the slightly longer-term bearish backdrop. This highlights the potential for a deeper retracement in that bearish USD theme, focusing on lower-high resistance potential around 98.20 or the 98.33-98.50 zone.
US Dollar Four-Hour Price Chart
GBP/USD: Cable Dips on BoE
The surprising item so far this morning is that two Bank of England members voted for a rate cut at today’s Super Thursday rate decision. Accenting the backdrop is the fact that this is Mark Carney’s final Super Thursday atop the bank as he’s set to step down in January of next year.
This morning’s news helped to push GBP/USD down to a fresh weekly low. The pair remains relatively strong given proximity to the 1.3000 big figure that came in as the high in October following a really strong run last month. The big question at this point is whether bulls defend the 1.2800 level similar to what happened last week ahead of FOMC; or whether a deeper retracement might develop to go along with a deeper retracement in the US Dollar that could bring into play support levels around 1.2750 or 1.2671-1.2705.
GBP/USD Two-Hour Price Chart
To read more:
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.